Rangarajan recommends lifting curbs on sugar sector

Mumbai: An expert panel, headed by PMEAC chairman C Rangarajan, has suggested giving freedom to millers to sell sugar in the open market among other recommendations. It has also recommended scrapping state-declared cane prices. The committee, in a press conference on Friday, has also suggested abolition of levy sugar system, under which mills are required to sell 10 per cent of their production to the government to meet ration shops requirement at a cheaper rate.

"The levy quota is leading to unnecessary losses to the millers. Our advice to the government is that buy sugar from open market for PDS," Rangarajan said. The committee has also recommended paying farmers fair and remunerative price (FRP) at time for cane purchase. It says the FRP can be revises on a half-yearly basis and the revenue sharing mechanism should be based on that.

The expert panel has also recommended scrapping state-declared cane prices.

The panel has advocated that sugar manufacturers should distribute 70 per cent of the realisation on sugar and by-products to cane farmers. "There is no need for quantitative restrictions on sugar supply," Ragarajan sai adding, the panel is advising removing restrictions on by-product use. The sugar industry is under government control, right from the level of production to distribution. Under regulated release regime, the Food Ministry fixes the quantity of sugar that mills can sell in the open market and ration shops. (Here's how sugar stocks reacted)

In January, the Prime Minister had set up an expert committee, headed by Prime Minister Economic Advisory Council (PMEAC)'s chairman, to examine issues related to decontrolling the sugar sector. Members of the committee include former Chief Economic Adviser Kaushik Basu and secretaries to the Department of Food and Agriculture. Sugar output in the 2011-12 season (October-September) was 26 million tonnes, against the annual demand of 22-23 million tonnes.